Correlation Between DATATRAK International and Bill

Can any of the company-specific risk be diversified away by investing in both DATATRAK International and Bill at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining DATATRAK International and Bill into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DATATRAK International and Bill Com Holdings, you can compare the effects of market volatilities on DATATRAK International and Bill and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in DATATRAK International with a short position of Bill. Check out your portfolio center. Please also check ongoing floating volatility patterns of DATATRAK International and Bill.

Diversification Opportunities for DATATRAK International and Bill

0.62

Correlation Coefficient

DATATRAK International  Bill

Poor diversification

The 3 months correlation between DATATRAK and Bill is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding DATATRAK International and Bill Com Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bill Com Holdings and DATATRAK International is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on DATATRAK International are associated (or correlated) with Bill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bill Com Holdings has no effect on the direction of DATATRAK International i.e., DATATRAK International and Bill go up and down completely randomly.

Pair Corralation between DATATRAK International and Bill

Given the investment horizon of 90 days DATATRAK International is expected to generate 4.18 times more return on investment than Bill. However, DATATRAK International is 4.18 times more volatile than Bill Com Holdings. It trades about 0.15 of its potential returns per unit of risk. Bill Com Holdings is currently generating about 0.01 per unit of risk. If you would invest  55.00  in DATATRAK International on August 27, 2024 and sell it today you would earn a total of  50.00  from holding DATATRAK International or generate 90.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	8.87%
Values	Daily Returns

DATATRAK International  vs.  Bill Com Holdings

DATATRAK International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DATATRAK International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, DATATRAK International is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Bill Com Holdings

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bill Com Holdings are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile essential indicators, Bill disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DATATRAK International and Bill

The main advantage of trading using opposite DATATRAK International and Bill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DATATRAK International position performs unexpectedly, Bill can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Bill will offset losses from the drop in Bill's long position.

The idea behind DATATRAK International and Bill Com Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.